The hard “fate” of Andriy Sadovyi: State Bureau of Investigation reopens criminal case against Lviv mayor

The State Bureau of Investigation has reopened the case that Lviv Mayor Andriy Sadovyi hastily closed with the National Anti-Corruption Bureau at the beginning of Russia’s full-scale aggression, journalist Volodymyr Horkovenko writes. This case concerns the dubious sale of a land plot on the ring road for the M10 industrial park, the construction of which has already been completed by Dragon Capital. The mayor is accused of various violations, ranging from embezzlement of public funds worth tens of millions of hryvnias to abuse of power and forgery of official documents. The highest possible sentence on these charges is up to 12 years in prison. But how realistic is it today to bring Andriy Sadovyi to justice?

The case concerning the land plot under the industrial park near Lviv has been going on for almost 10 years. As the media reported at the time, in 2015, the Lviv City Council, on the initiative of the mayor, made dubious decisions to allocate 23.5 hectares of land in the Ryasne-2 industrial zone.

First, the city’s ownership of this land plot, where about 300 residents of the Rava-Riasna community had shares, was in question, although Lviv considered the territory its own.

Secondly, the decisions to allocate this land plot, first for lease and then for sale to create an industrial park, were also very controversial: from a banal violation of procedures, lack of necessary signatures to manipulations with the terms of the park and use agreements. For example, initially, the concept did not involve selling at all – only renting. The clause on a possible buyout was introduced “off the cuff”. The tender for the lease was deliberately held under a shortened procedure so that only one participant, who did not even submit a full package of documents, could take part in it. Moreover, the requirements for the winner were changed retroactively after the competition was over. And the sale was conducted without a tender at a price that was at least UAH 40 million lower. price (according to other sources, by UAH 90 million).

Thirdly, the decision to spend more money from Lviv residents’ taxes on engineering infrastructure, which was not taken into account in the sale price, caused additional losses to the city budget. The budget also compensated losses to agriculture.

Since the land plot was sold rather than leased, the budget did not receive the planned lease payments, which amounted to another UAH 35 million. losses adjusted for inflation. Despite the fact that the investor (a “reputable Dutch company” and “international operator of industrial parks”) failed to start construction and, accordingly, did not fulfill the business plan, no jobs were created and taxes were not paid to the budgets of all levels in the amount of about UAH 2 billion. At the same time, the Lviv authorities, headed by Sadovyi, took no steps to terminate the unfavorable contract.

In November 2019, detectives of the National Anti-Corruption Bureau served Lviv Mayor Andriy Sadovyi and relevant “land” officials of the Lviv City Council with a suspicion notice in the criminal case 12015140350000942 of 21.07.2015. He was charged with misappropriation, embezzlement, abuse of power and forgery. Sadovyi then accused the state of putting pressure on the investor. It was very convenient to do this on the eve of the local elections, when the current mayor had nothing to improve his own ratings, and the prospect of a “green” mono-majority was frightening.

Less than a year later, a “large Dutch investor”, apparently disappointed with the Ukrainian investment climate (sarcasm), decided to sell its stake in the future industrial park to Dragon Capital. There were various rumors on the market: from the fact that Tomas Fiala was going to buy the property from the very beginning to the fact that Sadovyi had given personal guarantees to the owner of the “dragons” that he would resolve the situation with the criminal proceedings and the construction would be allowed.

Indeed, one could envy Fiala’s confidence: a year later, in November 2021, Dragon Capital announced the start of construction of the M10 facility. At the same time, according to the court register, the NABU criminal investigation was in full swing.

February 2022 is coming. A full-scale invasion, overcrowded train stations, and Lviv turning into a hub for refugees and a temporary refuge for millions fleeing the war. The mayor must obviously have a lot of ongoing rear operations, not to mention the missile attacks on the city’s critical infrastructure. But what is Sadovyi doing? On March 3, 2022, he seeks to close the criminal proceedings regarding abuses at the site of the future industrial park. According to people around Sadovyi, in the chaos of the first weeks of the great war, they wanted to get away with it as quickly as possible, before everyone recovered and appointed a new NABU director (Artem Sytnyk’s term ended in April 2022). Dragon was so confident that the case had been resolved that the European Bank for Reconstruction and Development became a co-investor in the project, and the international agency MIGA even insured the military risks of the facility against the arrival of missiles or drones.

As it became known from sources in law enforcement agencies, Andriy Sadovyi had been free of suspicion and personal criminal charges for only a year and a half. After all, on September 13, 2023, the State Bureau of Investigation registered a report in the Unified State Register of Pre-trial Investigations under the number 62023000000000791 on the facts of abuse of office by the mayor of Lviv – again in the case of the illegal sale of a land plot in the Ryasne-2 industrial zone.

Obviously, the work of the National Anti-Corruption Bureau will not be ignored. Judging by the available data, investigators found many more violations in the procedure for allocating and selling the land plot. And they may raise the question of, if not returning it to the city’s ownership, then compensation for the damages caused, which amount to hundreds of millions of hryvnias. By the way, according to the land cadastre, the normative monetary value of the plot exceeds UAH 168 million. Obviously, it is even more attractive now, as the industrial park is nearing completion. But now Andriy Sadovyi is really facing 7 to 12 years in prison. This is a kind of reputational loop for investors and the EBRD.

It’s not hard to guess what the mayor, who has spent years building his image as a hospitable businessman, will argue against the new suspicion. “Pressure on local self-government,” “curtailment of decentralization,” “a blow to investors,” “revenge for political position and criticism of the authorities,” and “redistribution of property.” However, if we are talking about a state governed by the rule of law, officials should be held accountable for abuses. No matter how eminent an investor is, they cannot illegally allocate land to avoid creating problems for them and subsequent investors in courts with the prosecutor’s office and other law enforcement agencies. When it comes to corruption offenses, in light of current accusations from international partners and a number of domestic corruption scandals, responses to such suspicions should be as tough as possible. Even if 8 years have passed since the embezzlement of community funds and everyone should have forgotten about it and “quietly gone into the woods.”